Question 1

Which of the following is a party who is in possession of an instrument that is payable to the party or to the bearer of the instrument?

Accepted Answer

A)   A holder.
B)   A bearer.
C)   A payee.
D)   An issuer.
E)   A transferee.F) A) and E)
G) All of the above

Question 2

Once an instrument is negotiable,it remains negotiable.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is an instrument payable to a specific,named payee?

Accepted Answer

A)   A bearer instrument.
B)   A delivery instrument.
C)   An order instrument.
D)   A transfer instrument.
E)   An acknowledgement instrument.F) D) and E)
G) B) and E)

Question 4

Helen worked for ABC Company as the company treasurer.She took 20 of ABC Company's checks,labeled as belonging to ABC Company.Over the course of one year,she signed and mailed the checks to American Express,her own credit card company,to pay her own credit card debt.Assuming the court follows the case in the text,Watson Coatings Inc.,v.American Express Travel Services Inc.,which of the following is the most likely result in a lawsuit by ABC Company against American Express to recover the amounts of the checks?

Accepted Answer

A)   ABC Company will prevail because American Express, as a payee, does not qualify as a holder in due course.
B)   ABC Company will prevail because American Express should have realized that fraud was involved from the fact that the checks were ABC Company checks.
C)   ABC Company will prevail because fraud was involved.
D)   American Express will prevail and will not be required to return funds.
E)   American Express will have to return ½ of the funds because the parties were equally at fault, American Express for taking the checks, and ABC Company for not more carefully supervising its employee.F) C) and D)
G) C) and E)

Question 5

In the process of negotiation,what is meant by the term "delivery"?

Accepted Answer

A)   The physical handing of an instrument from someone entitled to it to the person intended to receive it.
B)   The passing of a warranty that the instrument is collectible.
C)   The passing of a warranty that an instrument qualifies as a negotiable instrument.
D)   The passing of a warranty that the recipient is a holder.
E)   The passing of a warranty that the recipient is a holder in due course.F) A) and D)
G) A) and C)

Question 6

What type of endorsement did Susan make on the back of the check?

Accepted Answer

A)   A special endorsement.
B)   A special qualified endorsement.
C)   A blank endorsement.
D)   A blank qualified endorsement.
E)   An ineffective endorsement because the words "without recourse" have no effect.F) A) and B)
G) B) and C)

Question 7

In Russia a transaction involving a promissory note is a legitimate documentary transaction.

Accepted Answer

A) True 
 B)False

Question 8

A bank has given value for a negotiable instrument to the extent that the bank has a security interest in the instrument.

Accepted Answer

A) True 
 B)False

Question 9

What is the effect of Susan receiving notice the day after she cashed the check for Bob that the check had been stolen?

Accepted Answer

A)   The notice has no effect on her status as holder in due course because it was provided after she cashed the check.
B)   The notice prevents her from being a holder in due course.
C)   The notice prevents her from being a holder in due course only if Bob had been convicted of check cashing offenses in the past since she should have checked his criminal record.
D)   The notice prevents her from being a holder in due course only if she subjectively knew that Bob had been charged criminally with check cashing violations in the past.
E)   The notice prevents her from being a holder in due course because it was presented to a business; only individuals can avoid the effect of notice of theft by cashing a check prior to receiving notice.F) A) and B)
G) None of the above

Exam 27: Negotiation, Holder in Due Course, and Defenses

What type of endorsement did Susan make on the back of the check?

Correct Answer
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In the process of negotiation,what is meant by the term "delivery"?

Correct Answer
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In Russia a transaction involving a promissory note is a legitimate documentary transaction.

Correct Answer
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Which of the following is an instrument payable to a specific,named payee?

Correct Answer
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Correct Answer
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Which of the following is a party who is in possession of an instrument that is payable to the party or to the bearer of the instrument?

Correct Answer
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A bank has given value for a negotiable instrument to the extent that the bank has a security interest in the instrument.

Correct Answer
verified

Once an instrument is negotiable,it remains negotiable.

Correct Answer
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What is the effect of Susan receiving notice the day after she cashed the check for Bob that the check had been stolen?

Correct Answer
verified

Exam 27: Negotiation, Holder in Due Course, and Defenses

What type of endorsement did Susan make on the back of the check?

Correct AnswerverifiedShow Answer

In the process of negotiation,what is meant by the term "delivery"?

Correct AnswerverifiedShow Answer

In Russia a transaction involving a promissory note is a legitimate documentary transaction.

Correct AnswerverifiedShow Answer

Which of the following is an instrument payable to a specific,named payee?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a party who is in possession of an instrument that is payable to the party or to the bearer of the instrument?

Correct AnswerverifiedShow Answer

A bank has given value for a negotiable instrument to the extent that the bank has a security interest in the instrument.

Correct AnswerverifiedShow Answer

Once an instrument is negotiable,it remains negotiable.

Correct AnswerverifiedShow Answer

What is the effect of Susan receiving notice the day after she cashed the check for Bob that the check had been stolen?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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